Dear Mr. Premack: My wife and I are planning on selling our home in the near future. We are afraid that we’ll be exposed to the new $15,000 Obamacare tax when we sell. We think it is grossly unfair for the government to take our money like this. Is there any exemption or way around this terrible new tax? – MP

Let me begin by respectfully stating that your understanding of the new tax is almost entirely wrong. When Congress passed the new health care bill, they did indeed include a new tax. But it is not a blanket $15,000 tax on the sale of all homes (that was just an internet rumor). It is, in fact, a comparatively minor tax that most people will never have to pay.

We all pay taxes on our homes. Locally, we pay property taxes every year. On the federal level, our homes are subject to capital gain taxes when sold (after exemptions are applied). Whether unfair or not, these old taxes affect all homeowners, have been imposed for decades and their legality is accepted. The new tax included in this health care law is also legal but will affect a small minority of homeowners.

Here is how the new tax works. It starts in year 2013. It is imposed on taxpayers who have taxable income above $200,000 (for a single person) or above $250,000 (for a married couple). If your income is below those levels, you are entirely exempt from the new tax.

For those exposed taxpayers, the new tax is 3.8% of “net investment income.” When a homestead is sold, the capital gain exemption is applied. Any single person selling a homestead receives up to $250,000 in gain without having to pay capital gain tax. A married couple exempts up to $500,000 in capital gain. When an exposed taxpayer sells a homestead and has investment income smaller than the capital gain exemption, the “net” investment income is zero and the new tax does not apply.

Thus, in order to be exposed to the new tax, two things must happen. First, you must have annual income above the $200,000 or $250,000 limits. Second, you must have a capital gain above the $250,000 or $500,000 limits. Here are a few examples of how the tax law would be figured:

1. It is year 2014. You are a single person, employed, and making $220,000 per year. You own a home which you paid $300,000 to obtain. It is your primary residence and homestead, and you decide to sell. The market is good, and you get an offer of $600,000 for the home.

Step 1: Your income of $220,000 exposes you to the new tax, since it is above the single person $200,000 limit. Step 2: Your gain on the house is $50,000 above your exemption ($600,000 sale price minus $300,000 basis minus $250,000 exemption equals $50,000 taxable gain). Conclusion: you pay 3.8% new tax on that $50,000 gain of exactly $1,900. There is no flat $15,000 tax under the new law.

2. Same scenario, but the sellers are married. Step 1: your income of $220,000 is below the $250,000 married-person limit. You are not exposed taxpayers. You are not subject to the new tax (due to your income level) and are not subject to capital gain tax (due to your $500,000 capital gain exemption).

3. Same married couple, but assume their income is $260,000, that their house was purchased for $300,000 and they are selling it for $900,000. Step 1: They are exposed taxpayers since their income of $260,000 is above the limit of $250,000 for married persons. Step 2: The gain on the house is $100,000 ($900,000 sale price minus $300,000 basis minus $500,000 exemption equals $100,000 taxable gain). Conclusion: they pay new tax of 3.8% on that $100,000 gain of exactly $3,800. There is no flat $15,000 tax under the new law.

According to the National Association of Realtors, the median home price in the southern US is about $158,000. If you are exposed to the new tax then you are in the upper echelon of home sellers and wage earners. The vast majority of retired seniors neither earn enough income to be exposed to the new tax nor have homes valuable enough to be exposed to the new tax.